LNG boom to end

“Compared with the alternatives that state governments in particular might have to contemplate if they don’t have a better source of revenues, such as cutbacks in their core spending on health, education, transport and the like," he told Sky on Sunday.

Mr Eslake also warned that Australia could face a recession in two or three years when the LNG construction boom ends, compounding the need to address the deficit.

“It may not be that the federal government gets back to a reported surplus in the next two or three years," he said. “What I’m suggesting is they take the sort of measures that put the budget in much better structural shape so it can withstand the cyclical pressures better."

Budget management problem

He echoed Business Council of Australia chief executive
Jennifer Westacott
’s view that although Australia does not have a debt problem, it has a budget management problem.

He also called on the government to clarify how it intended to pay for the National Disability Insurance Scheme if it decided to press ahead with the policy.

“I don’t know how you can have an insurance scheme without an insurance premium," Mr Eslake said.